EBA opts for more lenient threshold for EU stress tests

By Will Caiger-Smith
31 Jan 2014

The European Banking Authority has shaved 50bp off the minimum capital ratio banks must have after the adverse scenario to pass its 2014 stress tests, prompting some market participants to suggest it is being too lenient.

In a briefing on the exercise on Friday morning, a spokesperson for the EBA said banks must have a CRD4/CRR common equity tier one (CET1) capital ratio of 8% as their baseline — before the adverse stress scenario is applied — and a minimum CET1 ratio of 5.5% ...

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